Study On The Economic Effect Of Local Debt In The Yangtze River Delta

Usually consider using the way of raising debt of local government to make up for the local financial resources,and use it to improve people’s livelihood and related infrastructure construction,can even money into local paroxysmal incident and crisis in order to promote economic growth,but local governments will also act as strong in the economic and social role,Governments may be forced to pay taxes,or indirectly affect interest rates,private investment to improve private sector borrowing costs crowd out private investment,moreover can appear on mortgage lending,loan repayment,borrow short and lend long and so on the behavior of the quench thirst further increasing fiscal pressure,in this level,the local government borrowing is likely to inhibit the growth of the economy,At the same time to expand exposure to local financial risks,local government borrowing is also generally regarded as a "double-edged sword" effect of public behavior.This paper studies the economic effect of local debt in the Yangtze River Delta urban agglomeration,which is currently relatively mature in development and has obvious differences in government debt governance ability.In addition to including the absolute amount of debt scale,and considering the fiscal revenue of local governments,this paper adds government leverage to measure the influence of government leverage on economic growth.Firstly,this paper adopts the relevant data of 41 cities in the Yangtze River Delta region from 2014 to 2020,and uses the panel regression model to investigate the influence of the total amount of local government explicit debt and implicit debt(characterized by the scale of urban investment bond)on economic growth.After that,the quadratic terms of total debt were added respectively to conduct curvilinear regression to observe whether there is non-linear impact of government debt on economic growth,and GMM model was used to conduct robustness test.In terms of the influence of government leverage on economic growth,this paper excluded the influence of total debt on economic scale to investigate whether government leverage ratio and debt ratio,which measures debt risk,is sustainable to economic growth,and conducted robustness test using panel regression method.Then we observe whether there is threshold effect of local government leveraged debt risk on economic growth through quantile regression.The empirical results show that the scale of local debt has significant positive effect and threshold effect on economic growth.The existence of local government leverage and the threshold effect of local debt risk on economic growth.To sum up,the "debt-driven" economic model is not sustainable.Local governments need to pay more attention to resolving debt risks.First,they need to properly control the size of outstanding debt and second,they need to strictly manage the growth of debt.